Lines Of Credit: How New Businesses Get Access

May 4, 2017 by CNH Finance, LP in category “Financing”

Anyone who has launched a business knows that once the company name is registered with a tax ID, the offers for lines of credit come pouring in. However, not all lines of credit are the same, and many can end up placing a big strain on finances before the business even gets up and running. Fortunately, there are a few things to keep in mind to help you find the best lines of credit available.

Avoid “Special Introductory” Rates

Many lines of credit offer special introductory rates, such as no interest for the first few months, or up to a certain amount. After that period, interest rates skyrocket, and the amount owed on the line of credit can eat into revenue, which is crucial to new businesses.

Arbitrary Limits

Many lines of credit seem to have arbitrary spending limits, especially for new businesses. In most cases, because new businesses do not have an established financial history, credit providers rely on existing credit scores. For new businesses, credit ratings usually are not that high, so the spending limits are sometimes lower than those of personal credit cards.

Asset Based Lines Of Credit

There are lines of credit which are based around the value of assets owned by a new business. Instead of getting locked into a credit account that follows arbitrary algorithms, asset based lines of credit are much simpler. An analysis is performed to figure out the value of assets such as receivables, equipment, inventory, vehicles, and much more. The total value is then used to create a revolving line of credit for the business. These lines of credit can be used just like any other. Businesses can access the capital they need. There is no debt. Credit ratings are not negatively impacted. The best part is that financing actually grows with the business.

Growing Your Line Of Credit

As businesses grow and acquire more assets, or sales improve, asset based lines of credit will reflect that with an increased spending limit. An asset based line of credit is the only financing designed to grow alongside a business to provide long-term financing without the restrictions of traditional lending products.

Get The Line Of Credit You Need Today

At CNH Finance, we specialize asset based credit. Our team of experts will unlock the value of your fixed assets and create a revolving line of credit to help your business grow quickly, without the restrictions of traditional loans.

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